A client has a large portfolio of liquid blue-chip stocks in their account with $1,000,000 in excess margin. They wish to use this excess margin to buy a $500,000 residential mortgage. Which of the following is true?

Question

Accepted Answer

Because mortgage positions cannot be carried on margin in client accounts (Rule 5250(2)), they must be fully paid, meaning the client cannot use loan value from other securities to buy them.

A client has a large portfolio of liquid blue-chip stocks in their account with $1,000,000 in excess margin. They wish to use this excess margin to buy a $500,000 residential mortgage. Which of the following is true?

Discussion